Nigeria will transit from Free On Board (FOB) trade term to Cost Insurance and Freight) before the end of 2017 as a way to boost indigenous carriers, create jobs and increase inland revenue. This was disclosed by Director General Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Dakuku Peterside.
Similarly, the agency is working on developing a cargo support system for indigenous operators to give them exclusive reserve of all government cargoes and help them increase tonnage capacity.
Peterside, during the Harmonised NIMASA Stakeholders Interactive Forum in Lagos over the weekend, with the theme, “Synergy: An Instrument for Sustainable Development of the Blue Economy.”
FOB requires the seller to deliver the goods to the port of loading as agreed and load same to the ship nominated by the buyer, while CIF gives the seller right to nominate the carrier and arrange insurance for the goods for the period of carriage.
With most of Nigeria’s import and export trade – both wet and dry cargo – over the decades on FOB term, the nation has lost billions of dollars, especially in the freighting of oil and gas cargo by foreign carriers, and particularly with the liquidation of the Nigerian National Shipping Line (NNSL).
Peterside said that changing the trade term is part of NIMASA’s shipping development initiative, adding: “We have commenced engagements with the Central Bank of Nigeria, Nigerian National Petroleum Corporation and the strategic segment of the National Assembly on how we can change our terms of trade from FOB to CIF.
“I believe we are making a lot of progress. It is not within our power to simply change the terms of trade, we need to engage the elements that have a role to play in that segment and we are doing that already because we know the multiplier benefits derivable from that change of terms of trade.”
Similarly, the NIMASA Executive Director, Operations, Mr. Rotimi Fashakin, in his presentation on the agency’s operational issues, expressed hope that the transition would happen before the year ends.
According to him, NIMASA is “liaising with other relevant government ministries/departments and stakeholders to facilitate the drafting and passage of the appropriate legislation to change the trade term from FOB to CIF.”